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Prenda Law Loses Another Appeal; $63K Judgment Upheld

Rhett PardonAug 4, 2014 5:15 PM PDT

MINNEAPOLIS — In another stinging defeat, Prenda Law counsel lost an appeal over attorneys fees sought by porn piracy defendants.

The Minnesota Court of Appeals today affirmed a $63,000 judgment against Prenda Law for attorneys fees and costs associated with a piracy case against defendant Spencer Merkel, four John Doe defendants and Qwest Communications Corp.

Today's $63,000 judgment was just the last in a string of court cases that have beset Prenda Law.

Just last week, the 7th U.S. Circuit Court of Appeals affirmed a lower court decision levying contempt sanctions against three Prenda Law attorneys who filed a copyright infringement case on behalf of adult operator Lightspeed Media Corp.

The 7th Circuit affirmed $287,000 in sanctions against Prenda Law counsel, which for several years has been prolific in exacting payments from porn piracy defendants through court-approved subpoenas.

Last year, another federal judge in Los Angeles ordered $81,000 in sanctions against Prenda Law attorneys.

In that case, U.S. District Judge Otis Wright said that the firm's attorneys had "outmaneuvered the legal system" in their porn piracy cases and should not only be sanctioned, but also be held accountable over possible federal racketeering violations and probed over their tax returns, among other disciplinary measures.

"What this case has in common with the previously asserted actions, again as we discuss further herein, are attempts to misuse subpoena power," the Minnesota appellate court said today.

The complaint against Merkel alleged two counts: the first for interception of electronic communications in violation of Minnesota laws and the second for civil conspiracy to violate the same statute.

Today's ruling was punctuated by the court's queries over the actual existence of the adult company, Guava LLC, that owned copyrights to the film at center of the original suit against Merkel.

"It is unclear ... whether Guava even exists," the court said. "Despite repeated inquiries by the district court, the record includes no evidence regarding Guava’s incorporation, the identity of its principals, or the nature of its business operations.

"John Steele, one of several attorneys who appeared on behalf of Guava in the district court proceedings, stated during a hearing that Guava has 'an office in Las Vegas. They’re also based out of I believe they’re in Nevis [in the Caribbean].'

"No corporate representative of Guava ever appeared before the district court."

In the appeal, Prenda Law counsel articulated four arguments for reversing the sanctions award of $63,000. But the court addressed and rejected each in turn.

Prenda Law asserted that the award must be reversed because the lower-court proceedings violated their rights to procedural due process; that there was insufficient evidence to support the district court’s finding of bad faith; that the district court awarded excessive sanctions; and that it was precluded from awarding sanctions after the action had been voluntarily dismissed.

"The district court’s initial determination that Guava demonstrated that the information it sought was relevant and material did not preclude it from later — on being made more fully informed of the facts — finding that appellants were acting in bad faith," the court said.

The appeals court ruling also upheld the lower court decision that enjoined Prenda Law from filing “any future civil action against the John Does or the ISPs without first posting a bond with the court in the amount of $10,000 or such other amount as the court deems appropriate, and without first obtaining a certificate of authority from the Minnesota Secretary of State.”